The technology industry is booming, fueled by increasing demand for software solutions across various sectors. Thus, investors could consider buying fundamentally sound tech stocks Amplitude, Inc. (AMPL), Weave Communications, Inc. (WEAV), and Enfusion, Inc. (ENFN), which are currently trading cheaply under $10.
The application development software market is experiencing substantial growth, driven by the increasing demand for software solutions across various sectors. This market encompasses a broad range of software tools and platforms designed to assist in creating, testing, and deploying applications for desktop, web, and mobile environments.
The increasing emphasis on digital transformation across various industries drives the demand for application development software, presenting significant growth opportunities for market participants. Research by Radixweb indicates that the global number of software developers is expected to reach about 28.7 million by the end of 2024, marking a notable rise of approximately 3.2 million developers over four years.
Therefore, the global application development software market is poised to grow at a CAGR of 7.8% by 2032.
Considering these conducive trends, let’s take a look at the fundamentals of the top Software - Application stocks, beginning with the third choice.
Stock #3: Amplitude, Inc. (AMPL)
AMPL and its subsidiaries provide a digital analytics platform for analyzing customer behavior internationally. The company offers Amplitude Analytics, Amplitude Experiment, Amplitude CDP, and Amplitude Session Replay.
On June 12, 2024, AMPL announced the expansion of its partner ecosystem with six new and enhanced integrations and the launch of a new integration portal to simplify and speed up integration development. These updates aim to help businesses better understand customer behavior and build superior products.
In terms of the trailing-12-month levered FCF margin, AMPL’s 20.38% is 106.7% higher than the 9.86% industry average. Likewise, its 0.66x trailing-12-month asset turnover ratio is 6.7% higher than the 0.62x industry average. Furthermore, the stock’s 74.64% trailing-12-month gross profit margin is 52.3% higher than the 49.01% industry average.
AMPL’s revenue for the fiscal first quarter ended March 31, 2024, increased 9.2% year-over-year to $53.74 million. Its non-GAAP gross profit grew 12.1% over the prior-year quarter to $55.48 million.
For the same period, AMPL’s non-GAAP net income and non-GAAP net income per share stood at $1.02 million and $0.01, compared to a non-GAAP net loss and non-GAAP net loss per share of $5 million and $0.04, respectively.
For the quarter ended June 30, 2024, AMPL’s revenue is expected to increase 6.2% year-over-year to $71.99 million. Its EPS for the quarter ending December 31, 2024, is expected to increase 10.6% year-over-year to $0.04. It surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past month, the stock has declined 2.4% to close the last trading session at $8.21. Its 12-month price target of $11.36 reflects a 38.4% potential upside.
AMPL’s POWR Ratings reflect its outlook. The stock has an overall rating of C, which translates to Neutral in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AMPL has a B grade for Growth. It is ranked #43 among 135 stocks in the Software - Application industry.
Click here to access the additional AMPL ratings (Momentum, Stability, Sentiment, Quality, and Value).
Stock #2: Weave Communications, Inc. (WEAV)
WEAV provides a customer experience and payments software platform in the United States and Canada. Its platform enables small and medium-sized healthcare businesses to maximize the value of their patient interactions and minimize the time and effort spent on manual or mundane tasks.
On June 26, WEAV announced the launch of its enterprise experience, which was created and tailored for group and enterprise healthcare practices. This new solution is designed to help practices with multiple locations, such as dental service organizations (DSOs), vision, veterinary, and medical groups, standardize their operations, create additional efficiencies, and accelerate revenue cycle management.
WEAV’s 0.90x trailing-12-month asset turnover ratio is 44.4% higher than the 0.62x industry average. Furthermore, the stock’s 68.82% trailing-12-month gross profit margin is 40.4% higher than the 49.01% industry average.
WEAV’s revenue during the first quarter that ended March 31, 2024, increased 19.2% year-over-year to $47.17 million. The company’s gross profit rose 24.3% year-over-year to $32.99 million. Furthermore, the company’s total current liabilities stood at $68.26 million as of March 31, 2024, versus $72.85 million as of December 31, 2023.
Analysts expect WEAV’s revenue for the second quarter (ended June 2024) to increase 16.8% year-over-year to $48.67 million. Moreover, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
WEAV’s stock gained 18.2% over the past nine months to close the last trading session at $8.98. Its 12-month price target of $15 indicates a 67% potential upside.
WEAV’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock has a B grade for Sentiment. WEAV is ranked #37 in the same industry.
Beyond what is stated above, we’ve also rated WEAV for Growth, Value, Stability, Quality, and Momentum. Get all WEAV ratings here.
Stock #1: Enfusion, Inc. (ENFN)
ENFN provides software-as-a-service solutions for the investment management industry in the United States, Europe, the Middle East, Africa, and the Asia Pacific.
ENFN’s 1.56x trailing-12-month asset turnover ratio is 150.9% higher than the 0.62x industry average. Furthermore, the stock’s 66.68% trailing-12-month gross profit margin is 36.1% higher than the 49.01% industry average.
During the first quarter, which ended March 31, 2024, ENFN’s total revenues increased 17.3% year-over-year to $48.05 million. Gross profit surged 15.2% from the year-ago quarter to $31.88 million. Furthermore, the company’s total current liabilities stood at $17.41 million as of March 31, 2024, versus $31.49 million as of December 31, 2023.
For the quarter ended June 2024, ENFN’s revenue is expected to increase 17% year-over-year to $49.97 million. Its EPS is expected to grow 156.8% year-over-year to $0.06. Moreover, the company surpassed the consensus revenue estimates in three of the trailing four quarters, which is impressive.
Over the past five days, the stock plunged 1.8%, closing the last trading session at $8.37. The 12-month price target of $10 indicates a 19.5% potential upside.
ENFN’s POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. ENFN is ranked #36 in the same industry.
In addition to the POWR Ratings highlighted above, one can access ENFN’s ratings here.
What To Do Next?
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AMPL shares were trading at $8.49 per share on Thursday afternoon, up $0.28 (+3.41%). Year-to-date, AMPL has declined -33.25%, versus a 17.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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